Drawback is a refund of 99 percent of the duties, taxes, and fees paid on imported goods that are subsequently exported, destroyed, or used in the manufacture of exported goods, under 19 USC 1313. The claim is filed in ACE on CBP Form 7551, within five years from the date of importation, and it is the most underclaimed refund in customs law, because the importers who are entitled to it do not know it exists, or do not have the records to prove the export. The goods that qualify are the ones that left the country: re-exported in the same condition, used in a manufactured export, or substituted under the TFTEA rules with a commercially interchangeable good at the 8-digit HTS level. The duty that does not qualify is Section 232, which is not drawback-eligible. Section 301 is eligible. That distinction alone is worth knowing.
What qualifies, and what does not
The basic rule is simple: duty paid on an import, goods exported, duty refunded at 99 percent. The export must be documented, with the export declaration, the bill of lading, and the proof that the exported goods are the same goods that were imported, or a commercially interchangeable substitute under the TFTEA substitution rules. Substitution is the provision that makes drawback practical for most importers, because it does not require tracing the specific imported unit to the specific export. It requires showing that the exported good is commercially interchangeable with the imported good, at the 8-digit HTS level, and that the duty was paid on the import. Without substitution, drawback would require a warehouse full of tagged inventory. With it, drawback requires a record.
Section 232 duties are not drawback-eligible. That is a statutory exclusion, and it means an importer who pays a 50 percent Section 232 duty on steel and then exports the product cannot recover that 50 percent. Section 301 duties are eligible, which means an importer who pays a Section 301 duty on a Chinese good and then exports it can recover 99 percent of that duty. The distinction matters more every year, as Section 232 rates rise and the share of duty that is not recoverable grows. An importer who does not know which duties are eligible will either fail to claim a refund they are owed or claim a refund they cannot get, and both mistakes cost money.
And the USMCA restricts drawback. Under the agreement, drawback on goods exported to Canada or Mexico is limited to the lesser of the duty paid in the United States and the duty that would be paid in the destination country, which is often zero, which means the refund is often zero. An importer who exports to Canada or Mexico and claims full drawback is claiming a refund the agreement does not allow, and CBP will deny it. The restriction is in the agreement, and the importer who does not know it will learn about it from a denial.
The five-year window, and the records that prove the claim
A drawback claim must be filed within five years from the date of importation, and the five years run from the import, not from the export. An importer who exports a good four years after importing it has one year left to claim, and an importer who exports after five years has no claim at all. The window is generous, but it is not infinite, and the importers who miss it are the ones who did not track the import date against the export date.
The records are the claim: the import entry, the duty paid, the export declaration, the bill of lading, the proof of export, and the basis for substitution, if claimed. The claim is filed in ACE on CBP Form 7551 and must identify the import and the export well enough for CBP to match them. A claim that cannot match them will be denied, and one filed without export documentation will be denied faster. Keep the records with the entry, not in a separate file.
And the claim should be filed promptly, not at the end of the five years. A claim filed in the first year is a claim with fresh records and a clear trail. A claim filed in the fifth year is a claim with records that have to be reconstructed, and the reconstruction will have gaps. The duty is the same. The likelihood of recovering it is not.
Why most importers never claim it
The reason is not complexity. Drawback is not part of the import workflow: the import team pays the duty, the export team ships the goods, and nobody connects the two, because the teams do not share a system and the refund is nobody's job. The fix is a process: flag the import entry when goods are intended for export, match the export declaration to the entry, and review qualifying exports quarterly.
The numbers make the case. An importer who pays $100,000 in duties a year on goods that are re-exported is entitled to $99,000 back, and the cost of claiming it is a form and a record. An importer who does not claim it has donated $99,000 to the Treasury, and the donation is not tax-deductible. The drawback program exists because Congress decided that duty should not be paid on goods that never enter the U.S. market, and the importers who do not claim it are the ones who have not read the statute.
Frequently asked questions
What is drawback?
A refund of 99 percent of the duties, taxes, and fees paid on imported goods that are subsequently exported, destroyed, or used in the manufacture of exported goods, under 19 USC 1313. The claim is filed in ACE on CBP Form 7551, within five years from the date of importation.
Are Section 232 duties drawback-eligible?
No. Section 232 duties are statutorily excluded from drawback. Section 301 duties are eligible. An importer who pays a 50 percent Section 232 duty on steel and exports the product cannot recover that 50 percent.
What is TFTEA substitution?
A rule that lets an importer claim drawback without tracing the specific imported unit to the specific export, by showing the exported good is commercially interchangeable with the imported good at the 8-digit HTS level, and that duty was paid on the import.
How long do I have to file a drawback claim?
Five years from the date of importation, not from the date of export. An importer who exports a good four years after importing it has one year left to claim. File promptly, while the records are fresh.